M&T Bank agreed to pay $64 million to settle allegations that it issued government-backed home loans that didn’t meet Federal Housing Administration standards.
As part of the settlement, M&T Bank admitted to the following facts: Between Jan. 1, 2006, and Dec. 31, 2011, it certified for FHA insurance mortgage loans that did not meet HUD underwriting requirements and did not adhere to FHA’s quality control requirements. Prior to 2010, M&T Bank failed to review all Early Payment Default (EPD) loans, which are loans that become 60 days past due within the first six months of repayment. Between 2006 and 2011, M&T also failed to review an adequate sample of FHA loans, as required by HUD.
M&T also allegedly manipulated error rates and failed to report errors it identified. By granting loans to individuals that did not otherwise qualify, M&T increased the risk that the loans would default, leaving the government–the taxpayers–to foot the bill.
The allegations were brought to light by a whistleblower, who will receive a portion of the government’s recovery as a reward.
Read the DOJ press release here.